Indonesia: Labour groups call on Blackstone to pay garment workers $10.8 million still owed in severance & unpaid wages four years after factory closure

Four years after the closure of Jaba Garmindo factory in Indonesia and in light of new reporting, the International Labor Rights Forum, AFL-CIO, United Students Against Sweatshops, and Global Labor Justice are calling on the Blackstone Group to pay Indonesian workers $10.8 million in legally owed terminal benefits. 

Jaba Garmindo employed around 4,000 workers when it closed in April 2015 without paying legally required severance pay and other compensation. These workers produced garments and apparel for international brands such as Uniqlo (part of Fast Retailing) and Jack Wolfskin, which was owned by the Blackstone Group at the time.

Failure to pay severance is a critical problem facing workers in the global garment industry and is especially widespread in Indonesia. Although factory owners are required to follow national law regarding severance, factories consistently fail to set aside funds to meet their obligations, and brand auditors rarely verify whether they are doing so. 

In April 2019, Business & Human Rights Resource Centre invited Blackstone, Jack Wolfskin and Fast Retailing to respond. All three responses are included below. Blackstone said it no longer has any investment in Jack Wolfskin. Jack Wolfskin responded that it had renumerated the workers through a fund it set up with the help of the factory union. Fast Retailing referred to statements on its website in which it confirms its commitment to continue dialogue with trade union representatives to help facilitate re-employment for former Jaba Garmindo employees who remain without employment. 

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Company response
16 April 2019

Blackstone's response

Author: Blackstone

While we are sympathetic to the situation of these workers, this factory was owned by a third party – not Jack Wolfskin. Furthermore, Blackstone no longer has any investment in Jack Wolfskin.

Additional background:

  • Jack Wolfskin W never owned this factory
  • Any liabilities as a continuing company would rest with the subsequent owners.  
  • The Workers’ Rights Consortium report notes that Jack Wolfskin, among other brands, is a member of the Fair Wear Foundation, has taken active steps to ensure workers received compensation owed in other cases and has said it is following the bankruptcy process in this case:

http://workersrights.org/freports/WRC%20Assessment%20re%20Jaba%20Garmindo%20%28Indonesia%29%2012.21.2015.pdf

 

Download the full document here

Company response
16 April 2019

Fast Retailing's response

Author: Fast Retailing

We really appreciate you give us an opportunity to include our company perspective.

Please note it has been made public in our website.

January 2018

https://www.fastretailing.com/eng/sustainability/news/1801180900.html

November 2018

https://www.fastretailing.com/eng/sustainability/news/1811301101.html

Company response
12 April 2019

Jack Wolfskin's response

Author: Jack Wolfskin

... Jack Wolfskin worked with PT Jaba Garmindo... until the factory went bankrupt. Our production share was only around 2% of the factory... We always paid on time, ordered constant production volumes with sufficient lead times so that the factory management was able to properly plan it into their production schedule.

...The Fear Wear Foundation investigated the case and our behavior thoroughly throughout the entire time... [Its] report about the case... can be found here: https://www.fairwear.org/wp-content/uploads/2015/02/Jack-Wolfskin-Indonesia-complaint-report-2016-final.pdf

We were the initial party who organized the meetings with other buyers of the factory to push the Indonesian curators to prioritize the payment of workers due wages and severance payments first from the assets before they pay banks or other stakeholders. When we realized that the process would possibly take years, we were the only company of the buyers of the factory which decided to take action. We actively contacted former workers and the union of the factory and set up a fund to support them.

With the great support from the union, we managed to get the bank account details of almost all of the workers who used to work in the factory and with the help of Fair Wear Foundation, Curators as well as the local union we managed to remunerate all workers of the factory from the fund we set up. We also invited other buyers to participate in this fund but didn’t hear back from them so that we decided to go ahead with it on our own...

Jack Wolfskin's full response is attached.

Download the full document here

Article
4 February 2019

Indonesia: Labour rights groups call on Blackstone to pay $10.8 million legally owed to garment workers

Author: International Labor Rights Forum

"Labor Rights Groups Call on Blackstone to Pay $10.8 Million Legally Owed to Indonesian Workers", 4 February 2019

In light of new reporting by Ken Silverstein, the International Labor Rights Forum, AFL-CIO, United Students Against Sweatshops, and Global Labor Justice are calling on the Blackstone Group to pay Indonesian workers $10.8 million in legally owed terminal benefits. Four years after the Jaba Garmindo  factory closed, the workers are desperate to receive the approximately $2,700 each that they are owed.  According to Silverstein... the total amount owed is equivalent to “about half of what [Blackstone Chairman Stephen] Schwarzman reportedly spent on his 70th birthday party,” but for workers, their share represents “a sum larger than they are otherwise likely to see at any one time in their lives.”

In solidarity with the Indonesian workers, some of whom will be touring Europe this month to call attention to the case, international labor advocates are demanding Blackstone make the workers whole through a social media campaign and petition...

Read the full post here